Dave is an innovator and change agent known in the mortgage industry for reinventing how loan officers quote rates and turn mortgage advice into a competitive advantage. Since founding Mortgage Coach in 2009, Dave has recorded over 1,000 interviews with top mortgage professionals, garnering his YouTube channel a reputation as “Netflix for loan officers.” He remains passionate about leveraging technology to help LOs provide consultative service that ensures borrowers receive the best home financing outcomes available. Dave is a frequent speaker at lender sales rallies and has spoken at MBA Tech, Digital Mortgage, HousingWire, Sales Mastery and the Mastermind Summit.
“The mortgage industry needs to become transformational because we are selling something transformational. Loan officers that deliver advice and value, going beyond the transaction, are more profitable.”-
Dave Savage
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Hello and welcome, everybody, to this episode of the Insight interviews. This is your host, Jason Abel, and for those of you that will watch this on video, you're already seeing just a stud, a titan of the real estate and mortgage industry, Dave Savage. Dave is the chief innovation officer at Trust Engine, he's the co-founder of Mortgage Coach and a brand-new entity that we'll get to sometime during this conversation that I know he's excited about. But Dave Savage, welcome to the show, my friend.
Good to be here. Good to be back. I remember when you guys kicked off this podcast, and I was super excited that you did it. And so, I don't know, has it been two years? How long has it been?
We’re going on three years, man. We're coming up on 200 episodes. We've done a few of these now. I don't know that we've been on camera and interviewed as many people as you have. I don't know that we'll ever be able to catch up. But dang it, we're on the path. We are on the path.
Congratulations. Congratulations.
Your episode is one of our most highly rated and most downloaded episodes, and I have a feeling with where I think our conversation is going to go today, you're going to be right back up in the top ten as far as downloads. So, I'm excited about where we're going to go today. You know, this our opening question. One, because, golly, it's just who you are. Two, we open up every episode like this, and I don't know why this episode should be any different. But Dave, as we kind of enter into this conversation, I usually ask same thing I asked you last time was who or what are you grateful for? And then as I was doing a little bit of research, even though you and I are friends and I know you really well, I just wanted to see what you're up to these days, and I see gratitude everywhere. And I see a pretty big post from a week or so ago about you and gratitude. So, I don't know that I'll ask you who or what you're grateful for, but what are you thinking about gratitude these days, my friend?
Yeah, well, no, I will shed a light on that post because I'm super grateful for everything.
My family, my kids, my wife. I am super grateful for the mortgage business. I think the post you were calling out, I was driving to my favorite coffee shop in my dream car, got this Tesla, and my favorite song, Beautiful Day by U2 came on, and I just was thinking about how grateful I am and how stoked I am, and then I'm like thinking it's all because of the mortgage space. And while it is a tough time in the mortgage space, indeed, I'm not going to debate whether it's the hardest it's ever been because there's a case to be made on both of those sides, but it's one of the biggest challenges it's ever been, whether you're a loan officer, whether you're a C suite executive. But this industry is awesome. And so, I've still never been more grateful that I found mortgage early in my life, and I'm super grateful today about that.
Yeah, so talk a little bit more about that. We coach mostly in the mortgage space, and we're just talking to people from around the country. And sure, there's some bright spots. I think you're one of the brightest spots, but man, there's a lot of darkness out there, even from people that are typically pretty positive and pretty forward thinking. And so, when you say you're grateful for, just expand on that, and especially your last point saying, yeah, even right now, even as tough as it's been, and many people have said it's the toughest it's ever been, even people that have been in for decades. So just expand on that a little bit more, when you say right now, I'm even grateful for it.
Well, and again, I do have a different seat on the bus, this mortgage bus right now, because I'm a technology provider that is providing a very innovative solution to lenders. That's where the puck is going. But first of all, I still know a lot of loan officers killing it now, by the way, not killing it by the definition of success in 2000 and 2021, I think we all need to just forget that those years happened. They were a COVID bubble. Rates went to two and 3%, and they never will again, or else something's really wrong in America that's bigger than that, but there's still loan officers doing over 100 loans a year. There's still loan officers doing over 200 loans a year. We are having to right size our businesses and right size to move in this market, but we still like, I have these couple of paradigms that your biggest competition is still yourself and your ability to execute. That has not changed. And so, whether you're a loan officer, you really get to control the opportunity that you have where you live. I've seen more loan officers that have decided, you know what? I want to fly fish in Denver, and my market is somewhere in California, or someone, I know, someone who's from Denver that moved to California, by the way, the list goes on, of mortgage professionals that are living right where they want to live. And COVID helped with that. They're living where they want to live. And then in terms of your ambition level, the sky's the limit. And then housing, you know, when you look at demographics and you look at housing, the industry is right sizing and we're having kind of a depression, but America housing is strong. Yeah, we have an inventory crisis, but there's a lot of opportunity, and I could just go on like first time home buyers.
"Yes, there's an affordability crisis, but there's never been more down payment programs in the history of, you know, and for kids or first-time home buyers that have families, that have homes, there's never been more equity in America for them to help that next generation to get ownership. So, again, there's challenges, but there's know, just opportunity after opportunity after opportunity."
Well, the biggest thing the thing that I wrote down about what you said is not just the examples of opportunity out there and good things happening in the midst of some of the hard stuff and some of the darkness, but just that idea of your biggest competitor is yourself. Just when you say that, that's something that I've already had an insight. Like, we're talking here, and I know that even for me, I coach other people on this, Dave, and I'll just confess to you right now, I have that issue. I think we all do to some degree, right?
We all do. Absolutely. Our biggest asset is ourselves, and our biggest liability is ourselves. Absolutely no exception to that.
So you mentioned something before we hit the record button about the industry just really having a major profitability challenge. And, man, I know that it's not only mortgage, it's not only real estate, there's other industries that are having the same problem right now, and there's leaders that are put in positions maybe that they haven't been put in before and they need to do something. And so, I don't know. What observations do you have with organizations that are just really challenged with that right now? And what type of solutions are you seeing right now?
Well, I'm a big fan-I've been doing a lot of interviews for the halftime report that Kristen and I are behind schedule on. I mean, we're almost into September, and I haven't published it yet, but I've been interviewing a lot of people around now we're halfway through the third quarter of -the bad news is the industry is still unprofitable. And I would go as far as, say, there's a profitability crisis in the mortgage business. I don't think it's a challenge, I think it's a crisis. The NBA's Quarterly Performance Report came out recently, and last quarter, the industry is losing, I think, $534 per loan. The good news is the quarter before, they were losing almost $2000. It was like $1,972. So, I mean, multiple quarters, and it was rough last year, and we're heading into winter. So that's a big problem. And it's causing companies to go out of business. It's causing companies to merge, even though that wasn't the goal to sell. It's causing loan officers to get a job outside of this beautiful industry that we have. But that's a challenge. But when I talk to people, there are, I think, leaders, I'm not going to call out names in this call, that understand the brutal reality and they're reimagining …there are companies loan officers that are reimagining their career as a mortgage professional and it's very bright. Like when we get to the bottom, whatever that is, you know still praying that rates come down by the end of the year like there's a lot, you know, like Dan Rollich is still saying hey there's still a way to have that happen. I'm not planning for that, but I do think next year between now and June of next year I think we'll have hit the bottom and then I think it's very very very bright. Brian Hale in my interview with him said it's going to be the next five to ten years of mortgage are stupendously great once we get to the bottom.
Yeah. And so with that challenge and you say hey, you're seeing some bright spots, some innovative thinkers, what types of things are they thinking about and probably more importantly, what types of things are they doing? I want the leaders that are listening to this conversation that might be probably are in the midst of the profitability crisis that you're talking about whether they're in mortgage or another industry, what types of things are you seeing the innovators think about and what types of things are they doing as a result of it?
Well, I think the cost cutting is an old idea and a must do. And cost cutting has to do with brick and mortar. Cost cutting has to do with less human beings on the team. And some of that, I think, is kind of like old school cost cutting. But I think there needs to be a reimagining of that. And there was a time when you would say, oh, we need to be more like WeWork. And everybody's like, yeah, but WeWork, I don't think they're bankrupt yet but they did not run- great model, collaborative workspace- but they didn't manage the business well. But I think the progressive folks that I talk to are like hey, let's cut cost on our brick and mortar but let's reimagine what it means to be a local referral-based mortgage lender and if we had a magic wand how would we reimagine office space? One, we'd have less of it and what we would have would be more creative, it'd be more collaborative and so I think that's a big part of it and then I think the industry is working really hard to leverage technology to drive cost down but as a whole it hasn't kept up. Costs keep going up. One thing I do advocate for in my seat on the bus, I noticed that loan officers don't use in a best practice way the technology that lenders buy to create a better conversion experience, to create a better retention experience, and I do think for any C suite leader listening to this, it's time to lead. It's time to buy the right tech, make sure it integrates and then train and lead and the industry doesn't invest enough money in training. The time I've spent at Rocket, a lot of people think, and I've spent a lot of time at Rocket headquarters, I've spoken for, you know, done different types of consulting, and they're a training organization. And you know now again, they're having trouble too, right now., so there really is no light to say, sure, here's the perfect company.
Yeah. The golden ticket or the silver -
The golden ticket or the magic pill, but we need to train better. We need to execute better. And the leaders that I think are going to come out the other end gaining market share, they're reimagining office space really smart. They're getting their loan officers to use their technology with training and leadership. And I think it's going to be a fun five to ten years, once we get to the bottom.
There's nothing- I see it so often- the tool belt is actually on the worker, the loan officer in this case, meaning the tool belt of technology, but they're not actually looking down and picking up the tool and using it in their day-to-day activities. And I, as a coach, get asked often, well, what tool should we use? What's the best practice du jour? What technology do we need to use? And my answer is always the same. The one that you'll actually use. I don't care if it's an Abacus or an Excel spreadsheet for your database, just use something instead of trying to find the perfect whatever. And I know you have a lot of amazing technology solutions. In fact, a lot of our clients are your clients, but having it and actually using it is two different things. And so, it's really resonating with me when you say, hey, it's time to actually train your people. Don't just buy the technology and say, hey, we have to train your people on it and ensure that they use it. I had your buddy, who I think is your buddy David Licken on the show the other day.
He's my buddy.
Yeah. And he said something along the lines of, let's say the average cost to produce a loan is- I forget the number that he called out, maybe it was 12,000 or something like that. He's like, with AI and some of the things that are not going to be in place, but for some of the things that are in place right now, that number is going to go down to like, $200.
Yeah.
And he's like, it’s happening now. And there is technology that's available now, and leaders just need to find out about it and actually start using it- training their people, same thing. So, when I hear two thought leaders that are not just in an ivory tower somewhere and not having their finger on the pulse things, you guys have your finger on the pulse, you're talking to CEOs, you're seeing what technology is out there, and two people inside of those, two people inside of a week have told me the same thing- I don't know. It sounds like if you're listening to this right now, please be paying attention to that.
Yeah, the thing I would add on to that is and the industry has put a lot of time and attention to how do we take cost and time out of the loan manufacturing process. In fact, I would say that the majority of tech companies and the majority of C suite executives, that is what they obsess over. But there's a lot of cost that could be taken out of the sales experience. One of the reasons why my full time focus right now, my number one initiative between now and the end of the year, it's called the Mortgage Coach TEDx Strategy and it's turning loan officers into advisors. While this is a selfish plug, it's not a selfish plug. This is a true public service announcement to the mortgage industry is that the loan officers that are delivering advice and value with price the lowest case study I've seen is six basis points more profitable and the highest one is NFM lending at 65 basis points more profitable. Like, 93 of their loan officers are 65 basis points profitable. More than like, I don't know, 290. Loan officers
Because they're using these tools.
But it's not just a tool though. They're asking questions beyond the transaction, so they know the family's hopes, dreams and goals and then they're delivering solutions in a, yes, technology driven way, but it's about going beyond the transaction. And the transaction or the mortgage industry is still very transactional, and it needs to become transformational because we are selling something transformational, but the industry doesn't do that at scale. It's kind of like, hey, we got 10% of our loan officers that know how to do that type of value selling and I just think a lot of profits being left on the table by not focusing on that.
Well, what you're bringing up is it's not just the technology that will boom, fix it, do it. It's the technology plus the relationship, plus your expertise that you bring to the table. And when you combine those two things, now that can really start being fun. I've seen plenty of people in a lot of sales positions that they're super relational, but they don't have the wherewithal to the detail to get the transaction done, keep the sale moving along. And I've also seen people that are only focused on, man, I got the best whiz bang tool and I know all the technology, but they're missing the relationship piece, the part where they're caring and advising when you combine both of them. Oh well, now that starts to be real fun.
Yeah. And we do need to get back to good old-fashioned mean like you're a loan officer prospecting matters, you know? I interviewed Sheila Gifford yesterday, just hit our YouTube channel and know leading a whole program around the book, Fanatical Prospecting.
Oh yeah, sure, sure.
"So, I don’t know, I just think it's an exciting time because you can win in this market and we're going to kill it in the next market, and whenever there's challenges like this, you're gaining market, someone's gaining market share. I always want to be on that team."
Yeah, that's exactly right. Two years from now- so we're recording this at the very end of August, 2023. So, if we fast forward to September 1 of 2025. Dave so 24 months from now, what are you seeing? What does the industry look like at that point?
I mean, I don't know about the inventory crisis because I don't have the code on how do we get out of this and we've never seen this. I mean, I did interview Casey Crawford yesterday and he talked about cheaper, so. And I interviewed Bill Dallas a few weeks ago. And so, I'm interviewing people and I'm trying to get some opinions and some actions on that. But interest rates are lower. I do think everybody in mortgage needs to conservatively-we are now in a business where rates trade between five and 7%, and remember, 63% of mortgages today are at two or 3%. And that's not going to change in a material way. Like for a decade there will be this consumer, call them a household hostage, they want to move up, but they feel stuck by their rate. Call them an accidental landlord. They could move up and rent out their house. And so, in 2025, that'll just be commonplace. And there will be the haves, the loan officers and the realtors that know how to be consultative and bring clarity and confidence to those consumers, and there will be the transactional loan officers, and the low-cost leaders will always have a seat at the bus. So, whoever's cheapest, they'll be doing business. And then I do see the continued trend of the haves and the have nots. And the haves, they understand the value of data. They understand the value and they've created systems and cultures that take action on data, so they're really optimizing. Like, I do believe there'll be a whole class of lenders and loan officers that are more efficient, more effective and have more scalable businesses. But then there'll also be - by the way, they'll also have teams- they'll know how to operate at scale. And then there's always going to be the folks in the bottom, but the people at the top are going to do more market share in 2025.
Anything else with- AI is such a buzzword these days. Is there anything from a technological standpoint or the way that the transaction is done or is there anything else that you see?
Oh yeah. AI Underwriting is here. I mean, I think it's 2023. We woke up in the mortgage industry the first time in our career where 80% of mortgages had a rate half of what they are, and they'll be like that forever because rates are never going to two and three. But the story and it's not just an American story, this will be the year that AI hit the common person, the general public. I mean, the nerds have seen this coming, and I've got people on my team that say yeah, I saw that before you saw it. But I mean, the general public saw AI this year and it will continue. AI underwriting will be a commonplace. We're working really hard so that a total cost analysis is being created by a digital assistant. If the machine can beat a world champion at chess, the machine can create a really good advice experience. Although our focus is primarily on how do we augment, how do we help the local referral-based originator be more valuable to consumers and deliver better advice? But that will be in the market. We're currently bringing that to the market. By middle of next year, we'll be doing it in a pretty innovative way, and by 2025, it'll be commonplace.
It'd just be the way business is done.
Well, there's still going to be the haves and have nots. There's still going to be people that are old school transactional selling. Here's your rate, here's your payment, here's your cash to close, I can close your loan on time, transactional. But if I have anything to do about it-
You do, by the way,
Yeah, and our two hashtags for our company are financial Freedom Lending, where we're creating automation so that people aren't just getting loans to get homes, they're getting loans to get homes in a way that they achieve financial freedom, because I do believe that's the American dream. And then our other big hashtag is no Bar Left Behind, which is all about like, you know, what if someone is in your database and they qualify and they should get a loan, you know about it. So, I hope financial Freedom lending is a common word. It's commonplace, and we stop just trying to close loans for people, and we’re in the business of helping people achieve financial freedom with homeownership.
Well, speaking of that topic, I know that you had some decisions to make within the last few years. You sold mortgage coach and trying to figure out, okay, what the heck is next? What does this look like? I know there's trust engine, but you mentioned something to me that, man, I'm intrigued by, and that is First Home IQ. What can you tell me about first home IQ?
Yeah, well, so first of all, I am working as hard as ever and totally committed to changing with trust agent. That is my job. That is my passion. But for my whole career, I've been trying to change the industry from the inside out and interviewing loan officers and trying to change the industry from the loan officer up. And to me, part of first home IQ, I did not grow up financially literate. I don't want to spend too much time on just how illiterate I was. One little sound bite. Like, the first year I made 10,000 in the mortgage industry, I somehow got $10,000 in credit card debt, literally. That's how that works.
Yeah, for sure.
From working at Smart and Final, making $14,000 a year, made almost more money in an entire year and also started using credit cards at the same time.
Yeah, it's amazing how that works.
But I really want to go to high schools, college age kids, Gen Z and First Home IQ is all about leveraging my influence in mortgage and real estate and organizing the mortgage industry and real estate industry to go into high schools, colleges, boys and Girls Clubs, YMCA, like any organization that cares about the future of Gen Z and wants to bring in people to educate about homeownership at the youngest possible age. And so, first home IQ. You know, check it out. First Homeiq.com and it’s exciting. You know, Kristen Messerly is the executive director. Todd Booksband is the- three of us co-founded it, and the goal is for the mortgage industry to bring leadership to the next generation in a way that's really profound. We think we can have 5 million Gen Z kids going through this platform by 2025. That's actually, if you go to our website by 2025, we want to be inspiring, educating, and resourcing 5 million Gen Z-ers a year.
Yeah, very cool. I'm 52 now, and 30 something years ago, I saw that there just wasn't a lot of financial literacy being taught in schools. And we all, kind of like you said, you made a bunch of money for the first time and you went out and spent it all, right? And part of that is you just didn't know what you did and then some.
Like, I spent it all. Doubled it.
That's exactly right. And I'm super grateful that you're doing that. I think it is different now. There's more information available because of the Internet and the phones and things for kids, but still not nearly enough, and so that you guys are elbowing your way in and throwing even more resources towards the financial literacy for that demographic? Man, that's great. So firsthomeiq.com. Dave, I feel like you and I could talk for a couple of hours. Is there anything that we have not touched on with leadership, with dealing with profitability crisis? What to do in a down market? Is there anything that I haven't asked you about that you'd hope that we would touch on?
Well, to your point, you and I could talk forever on, you know. But something that Kristen and I do- when we publish the halftime report that I am advocating for and pushing leaders in mortgage companies is, I'm going to use the word extreme transparency, but not in all the ways that you think right now. And I'll give you one example where I think we, as an industry, if we're going to reimagine our industry and have a real sustainable, profitable industry, I'm going to advocate every leader who's watching this that you have a scoreboard that your loan officers look at and it's how many loans do they close and what was the volume? And we celebrate that. That is the metric. But conversion rates, how many credit reports did you run versus how many loans did you close? I can just tell you right now that is not an easy number for branch managers, regional leaders, even heads of production. Like if you say, hey, what's your conversion? They can get it.
But they all measure it a little bit differently. And when's a loan a loan? I get it.
It's really simple. When you run a credit report, that's like someone who gave you their Social Security number and it was funded, you should scoreboard that.
Agreed.
I think that is an incredibly important efficiency metric that I am going to push the industry, start measuring that, start score boarding that and then profitability. Some loan officers have a lot less price exceptions than other loan officers, and the majority of them have a lot. I'm not saying depending on how you do your pricing, some lenders and regions, they price their loans knowing they're going to have price exceptions, some price it like we don't want price exceptions. But regardless, scorecard that. I think every lender, every loan officer, every manager should know that. And so extreme transparency and scorecard the metrics. And here's the deal. There is a profitability crisis taking place in our industry, and so, score the measurables, the controllables that will create a more profitable mortgage experience. And here's my last point on this, is not only will that make you more profitable, that'll improve the customer experience, right? Because the loan officer that has the best conversion rate, that has the least price exceptions is delivering the least friction in the sales process, is winning trust at scale. And so, I want to put a real push that it is time for extreme transparency in terms of measuring the things that we can control, measuring the things that matter to reshaping our industry going forward.
I can't imagine extreme transparency ever being a bad thing. I don't know.
It's a hard thing.
I get it. It's hard. It's hard. But I don't think it's bad. It reminds me of this idea. It's kind of the same but different Dave, of the salesperson that focuses on their quota, or their commission as opposed to the loan officer that just focuses on the client and doing an amazing job, and all the things that you've been talking about. The commissions of the profitability, I don't know, they just seem to follow. They just seem to happen. And so, if you're focusing on the things that you're talking about, you're right, that the profitability, the customer engagement, the client experience, it just goes up and it just kind of takes care of itself, if you will. And so, yeah. It's resonating with what you're saying. I do have kind of a left-hand turn question for you. You ready for this one?
Go.
So, the last time we were together, you interviewed me, and it was on the topic that we're still doing a lot of mindset selling. And I took you through an exercise and I told you I was going to hold you accountable to it. And I don't know, maybe we've texted once or twice, but I don't know, in this forum, I just feel the need to ask you about- do you remember what it is that you were working on?
I do, yeah. I don't remember how I verbalized it, but just being better, healthier, athletic, had to do with losing weight. And I do remember it. What I don’t remember was that- I didn't remember you're going to hold me accountable. But thank you.
Oh, in public.
I appreciate that.
And the only reason I'm doing that is because I know your heart and I know our relationship. But I'll ask you this, the thing that stuck with me is the actual thing that you committed yourself to was sticky. It was sticky to me. And I didn't research this. I didn't have them on my notes. I just remember the simplicity of it was, hey, I just want to sweat every day. I just want to sweat every day. And that just takes the whole, you know, whether you're wanting to get fit or more healthy or lose weight or whatever it is, because we all have some types of goals around that. I was like, that is so stinking simple. And so, dude, I'm a coach. How are you doing with that? How's it going?
I'm doing better, but I'm not perfect. And actually, last year was the first year in ten years where I actually dropped some weight. I didn't hit my goal, but every year is like three pounds, four pounds, and you do that over the course of a decade. And I got to where I was, and I will end up down. So, I'm down, but I'm still not going down as fast as I can. And I did get plantar fasciitis bad.
That sucker hurts, man.
Which, by the way, again, I'm super grateful for it because it gave me this heads up that if you don't take care of your body, it really was so painful that I couldn't do my morning walks, which was really one of my favorite ways of sweating. Sure, I'd go to different beautiful places, and it was just a reminder, like, hey, Dave, I turned 59 this year. I'll be 60 next year, and it's like, use it or lose it. It's your choice. Start using it or you're going to lose it. So, thank you for the reminder. I'll dig in a little deeper on the sled every day, but I'm making progress.
Well, I will tell you, part of the reason I'm bringing that up is a selfish reason. It was so sticky to me, I can't tell you. And it's been, I don't know, a handful of months since we had that talk. I can't tell you how many times I've said to myself, dude, are you sweating every day? And the answer is no, by the way. And so, by coming up with that for yourself, you've actually helped me because it's just on my mind more. So, thank you for that. And thank you for going along with me asking you that.
Yeah. No, I love it. I appreciate it. Because it really is not only is it important for the weight and the health and body, I mean, dude, if we had Steve on here, he would be, like, listing all the science. How can you be your best mindset if you're not triggering all your -
Oh, no question.
It's probably never been more important to sweat every day.
Yeah. No. Agreed. Dave so good, dude, you didn't disappoint yet again. I can't wait to actually listen to this myself when we drop this, which will be in a month or so. But thank you so much. Can't tell you enough how grateful we are in the industry for you. Can't tell you how grateful we are at Rewire for you and today, man, thank you so much. Hope we get to do it again.
Yeah, anytime. Keep driving, people getting better. It's all about mindset. It's all about rewiring your mind. So, thank you, brother.
You got it. Dave Savage. We'll put all your contact information in the show notes, but thanks, my friend. Talk with you soon.
Take care.
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